Invesco Fixed Income - Institutional Money · Invesco Real Estate Investment focus: •Global direct real estate •Global public real estate investing AUM: US$162.3 billion1 Locations:

Presented by

Claudia CalichHead of Emerging MarketsSenior Portfolio Manager

Invesco Fixed IncomeEmerging Market Strategies Process and Market Climate

This document is exclusively for use by professional clients and financial advisors in Continental Europe only and is not for consumer use. Please do not redistribute this document.

2 For Use by Professional Clients in Continental Europe Only. Not for use with the public.

Section 1 - Investment ProcessFirm OverviewPhilosophy and ProcessPerformance

Section 2 – Climate OverviewEmerging Market Historical PerspectiveCurrent Market Perspective

Appendix

Table of Contents

All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. This is not to be construed as an offer to buy or sell any financial instruments and should not be relied upon as the sole factor in an investment making decision. As with all investments there are associated inherent risks. Please obtain and review all financial material carefully beforeinvesting. Past performance is not indicative of future results. This portfolio is actively managed. Portfolio holdings and characteristics are subject to change. This does not constitute a recommendation of the suitability of any investment strategy for a particular investor. The opinions expressed herein are based on current market conditions and are subject to change without notice. For more information on the indices discussed herein, refer to the Appendix.

3

Investment Process - Firm Overview


The Value We Deliver to Our Clients Specialized investment capabilities globally

Data as of September 30, 2009. Source: Invesco Fixed Income and Invesco Ltd.1 Invesco Fixed Income does not include all the fixed-income entities within Invesco Ltd., and is not limited to those fixed-income assets within the GIPS-

Compliant Firm Invesco Worldwide; therefore, the assets under management reported here for Invesco Fixed Income may not match the fixed-income assets reported in the Invesco earnings statement.

The listed investment centers do not all provide products or services that are available in the U.S., nor are their products and services available on all platforms. Please consult your Invesco representative for more information.

Invesco Ltd. Investment Teams

• Us$417 billion in assets under management (AUM)

• More than 500 investment professionals

• Operations in 20 countries

• Distinctive investment teams

• Disciplined investment processes

• Local and global oversight

Location: Toronto

Invesco TrimarkInvestment focus:•Canadian equity•Global value equity•Canadian fixed income•Balanced portfolios

Locations: Melbourne, Hong Kong, Shenzhen, Taipei and Tokyo

Invesco Asia-PacificInvestment focus:•Asia Ex-Japan•Greater China•Japan •AustraliaLocations: Atlanta, New

York, Boston, Frankfurt and Melbourne

Invesco Global StrategiesInvestment focus:•Global equity (global, non-U.S., and emerging market equities)

•Global quantitative equity (quantitative active, enhanced and long/short strategies)

•Global asset allocation (tactical asset allocation, alternative beta and multi-asset class solutions)

Locations: Dallas, Atlanta, Hong Kong, London, Madrid, Munich, New York, Newport Beach, Paris, Prague, San Francisco, Shanghai and Tokyo

Invesco Real EstateInvestment focus:•Global direct real estate•Global public real estate investing

AUM: US$162.3 billion1

Locations: Louisville, Houston, New York, London, Frankfurt and Melbourne

Invesco Fixed IncomeInvestment focus:•Money markets and cash management

•Stable value•Global and U.S. broad fixed income

•Alternatives/financial structures

Location: Chicago

Invesco PowerSharesInvestment focus:•Index-based and active ETFs

Location: Henley, U.K.

Invesco PerpetualInvestment focus:•U.K. and European equity•U.K. and European fixed income

Locations: Houston, Austin, Denver and San Francisco

Invesco AimInvestment focus:•U.S. growth equity•U.S. core equity•U.S. value equity•International and global growth equity

•Sector equity•Balanced portfolios

Locations: Atlanta, Boston, Chicago, Denver and New York

Atlantic TrustInvestment focus:•High-net-worth multimanagement

Locations: New York, Mumbai and Tokyo

WL Ross & Co.Investment focus:•Distressed and restructuring private equities

Locations: New York, London and San Francisco

Invesco Private CapitalInvestment focus:•Fund of funds private equity•Venture capital


Specialized Fixed-Income Capabilities Delivered Globally

Invesco Fixed Income• US$162.3 billion in AUM1

• 115 investment professionals• Operating in six cities across four countries

Stable ValueSince 1985Top 5 stable value manager by AUM3

– Diversified and cost-effective approach using commingled funds

– Unique in offering multimanager product

Cash ManagementSince 1980 13th largest money market fund complex2

– Taxable, tax-free and government products– Multiple currencies

AlternativesSince 1990Award-winning financial structures manager5

– Senior secured bank loans, structured securities, credit default swaps

– Credit opportunity – Credit arbitrage

Data as of September 30, 2009, unless otherwise stated. Dates represent launch of initial product managed in this strategy. Any reference to a ranking, a rating or an award provides no guarantee for future performance results and is not constant over time.1 Invesco Fixed Income does not include all the fixed-income entities within Invesco Ltd., and is not limited to those

fixed-income assets within the GIPS-compliant firm Invesco Worldwide; therefore, the assets under management reported here for Invesco Fixed Income may not match the fixed-income assets reported in the Invesco earnings statement.

2 Source: iMoneynet domestic and offshore money market fund rankings as of June 30, 2009, out of 142 fund complexes.

3 Source: eA Stable Value Fixed Income universe as of December 31, 2008, run April 1, 2009, with 22 firms as of that date.

4 Source: PIOnline.com; out of 35 managers ranked by U.S. institutional, tax-exempt AUM as of December 31, 2008.

5 Winner of Creditflux Best Seasoned ABS Manager Award, 2007.

Broad Fixed IncomeSince 1977Top 20 manager by AUM of U.S. fixed-income assets4

– Core, core plus, intermediate– Mortgage-backed securities (MBS)/Asset-Backed

Securities (ABS), investment grade, high yield, emerging markets, municipals and convertibles

– Global, non-U.S. dollar, European, broad alpha


Positioned to Meet Client NeedsDelivering diversified investment strategies the way our clients want

• Institutional separate accounts

• Collective trusts

• Mutual funds (onshore and offshore)

• Actively managed exchange-traded funds (ETFs)

• Private placements

• Separately managed accounts

• Variable insurance funds

• Subadvised accounts

Delivered the Way Our Clients WantDiversified Investment Strategies

Money Market

Global

Core

Credit Arbitrage

Sector

Opportunistic

Stable Value

Senior Secured Bank Loans

Emerging MarketsHigh Yield

More Aggressive

More Conservative

Municipals

Convertibles

Placement based on three-year standard deviation as of May 31, 2009

Not all strategies are available in all products. Diversification does not guarantee a profit or eliminate the risk of loss. Standard deviation measures a fund’s range of total returns and identifies the spread of a fund’s short-term fluctuations.


We believe our approach to decision making truly sets us apart from other fixed-income managers.

• Delivers our collective expertise to every client• Engages specialists closest to the information• Evaluates continuously • Shares information instantly to allow for timely implementation• Records and evaluates choices to enhance decision quality

Investment PhilosophyWe believe fixed-income opportunities are best captured by independent, specialist decision makers interconnected as a global team.

Disciplined Philosophy, Consistently AppliedHow our approach is different

8

Investment Process - Philosophy and Process


Portfolio construction

• Emerging Market specialist team led by Claudia Calich, Head of Emerging Markets

• Utilize both a bottom-up and top-down approach

• Active decisions for: country, duration, currency and sector decisions

Team of specialists

• Team of three portfolio managers and one analyst

• Emerging Market specialists

• Dedicated EM Corporate specialist

• Cross-trained team capable of fulfilling multiple roles

Proprietary technology

• Factors in investment parameters, market opportunities and realistic decision-making skill

• Creates guideline position sizes in each return source

• Global communication and recording platform

Clear investment discipline

• Investment decisions captured and measured

• Global communication

• Independent rating scale (A to E) indicating recommended risk stance

• Active Buy/Sell discipline

Dynamic Portfolio Design


Debt instruments issued by countries defined as emerging or developing by the World Bank1 or the United Nations as well as public and private companies located in those countries. By diversifying our strategy to many possible alpha sources (sovereigns, local currency debt and EM corporates), we seek to achieve balance and the ability to perform in all market environments.

Advantages include:

• Enhance current income: Typically produces 300 to 500 basis points of additional yield relative to U.S. Treasuries

• Flexible implementation: There are a vast number of securities and tools to implement Emerging Market Bond strategies

• Diversification: Emerging Market bonds have typically had low correlation to other fixed income asset classes

Risks include:• Political risk• Currency risk• Default/liquidity risk

Disciplined Approach to Emerging Market Investing

1 IMF list of emerging and developing economies is in the Appendix.


Managed for long-term excess return • We are index aware but will take large tracking error bets in extreme cases to preserve

capital…we will go to a 0% country weight.

• Country, currency and security positioning driven by sound investment rationales and rigorous fundamental and technical analysis.

Value add at many levels:• Market directional view (yields and spreads)

• Country positioning

• Duration positioning

• Currency positioning

• Security selection

—Sovereigns

—Local Currency Debt

—EM Corporate Debt

Disciplined Approach to Emerging Market InvestingOur focus within the market


Disciplined Approach to Emerging Market InvestingPotential benefits of local currency debt

• Dynamic Return Profile, Moderate Volatility and Favorable Sharpe Ratios

• Diversification Benefits Versus Other Asset Classes

• Broad and Growing Set of Investment Opportunities

• Inefficiencies Within a Market that is Still Evolving


Macro-Economic

Determination

CreditDetermination

SecuritySelection

BOTTOM-UP Fundamental Analysis

Country Visits

Country WeightingRecommendation

Corporate Bond Environment

Security Selection- Sovereign- Local Currency- Corporate Bonds

Yield Curve Analysis

Active Buy/Sell Discipline

TOP-DOWN EM outlook and positioning

Sovereign Fair Value:Invesco Spread Model

UST and Spread Duration Decision

Technical Factors

Monthly Global EconomicOutlook

Invesco resources: High Yield TeamGlobal Fixed Income TeamInvestment Grade TeamGlobal Equity Team

External resources: Sell-side economistsIndependent research (IMF, EIU, IIF)

MarketDetermination

Credit Analysis Relative ValueMacro-Analysis Market Analysis

RiskManagement

Proprietary Systems & Meetings

Security Selection- Sovereign- Local Currency- Corporate Bonds


Active Buy/Sell Discipline

Key Inputs

Disciplined Approach to Emerging Market InvestingDecision making: Emerging Market bonds


Macro-Economic

Determination

SecuritySelection

TECHNICAL

Long vs. short market

New issuance, funding plans

Corporate issuance

Value vs. peers

FUNDAMENTAL

Liquidity and solvency

External accounts

Fiscal accounts

Debt dynamics

Monetary policy

Banking and corporateSector

Politics

In house ratings

Country visits

Global macro (growth, interest rates, inflation)

Commodity prices

Geopolitical risks

Risk appetite

Sovereign Analysis

Global Macro-Analysis Overweight or Underweight

Security Selection

Hard currency debt

Local currency debt

TR Swaps, CDS

FX Forwards

Corporate alternatives


Liquidity of the instrument

Relative Value

Disciplined Approach to Emerging Market InvestingSovereign analysis and decision making

Key Inputs


Portfolio positioning

Investment thesisAllocation

rationale

Decision drivers

For illustrative purposes only. The opinions expressed are based on current market conditions and are subject to change without notice.

Clear Investment ProcessMacroeconomic determination - Emerging Market strategy


• Bias and Allocation ratings expressed, as with macro alpha sources

• Risk rating gives an expression of potential worst case, expected issuer volatility

• Credit site enables tracking of 'ticker' securities across currency and yield curve

Risk rating, allocation rating and bias provide guidance

Internal, forward looking rating


Clear Investment ProcessSovereign analysis example: Turkey



Clear Investment ProcessCurrency selection: Colombian Peso



Clear Investment ProcessSecurity selection: PEMEX - Emerging Market strategy


19

Disciplined ApproachTeam overview - Emerging Market allocation

As of September 30, 2009. Responsibilities are subject to change.

Portfolio Manager

• EM Corporate top down call

• EM Corporate bonds (credits in Latam/EMEA/ Asia)

• Financials• Properties/real estate• Steel• Gaming • Telcos/media• Homebuilders• Oil/gas• Retail• Commodity producers• Trading

Portfolio Manager

• Credit oversight for EMEA and Asia countries

• 4 duration calls• 13 currency calls• Trading

Senior Analyst

• EM credit analysis• 2 duration calls• 4 currency calls

Head of Emerging MarketSenior Portfolio Manager

• Provides EM sovereign top down call

• Credit oversight for 11 Latin American countries

• 5 duration calls• 7 currency calls• Trading

Claudia Calich Eric Lindenbaum Jack Deino Ashok Parameswaran


20

• Global Investment Policy Committee. The Global Investment Policy Committee includes members of the Office of the Chief Investment Officer and is responsible for providing oversight of our investment capabilities and products.

• Global Credit Advisory Committee. The Global Credit Advisory Committee links our global credit processes to obtain consistent and high-quality credit research emphasizing accountability, communication and transparency across all research teams.

• Global Process Management. Global Process Management is responsible for development of Invesco Fixed Income’s proprietary technology and risk management platform, and creation of quantitative models and tools that enhance market views and investment strategies.

1 Indicates regional office head. As of September 30, 2009. The Chartered Financial Analyst® (CFA®) designation is globally recognized and attests to a charterholder’s success in a rigorous and comprehensive study program in the field of investment management and research analysis.

Invesco Fixed Income Organizational StructureAligned with investment philosophy and process

Karen Dunn KelleyCEO, Invesco Fixed Income

Rich King1

CFAHead of U.S. Investment Grade Fixed

Income

Lyman Missimer1, CFA

Head of Cash Management and Municipal Bonds

Jan FriedliHead of Global

(ex-U.S.) Investment Grade Fixed

Income

Greg Stoeckle1

Head of Senior Secured Bank

Loans

Carolyn Gibbs, CFA

Head of Global High Income

Lu Ann Katz1

Head of Global Investment Grade Credit

Research

Mark MatthewsHead of Global

Process Management

Office of the Chief Investment Officer


Volatility – Historic pattern, current trends and implications

Credit Risk – Creditworthiness, maturity, structure

Decision Quality – Relative to expectations, managing underperformance

Appropriate – Client guidelines, prospectus & regulatory requirements

Realistic – Market opportunity, liquidity conditions

Optimal – Most efficient risk and return balance

Implementation Risk – Appropriate to design requirements, liquidity

Overall Oversight - Design, Decisions, Construction

Decisions

Portfolio Construction

IVZ Oversight

External Oversight

IFI Risk Management

Source: Invesco, September 2009.

IFI Oversight

Design

Global Performance Measurement & Risk

Compliance

Auditors

Rating Agencies

Active Risk ManagementEmerging Market oversight

22

Investment Process – Performance

23 For Internal Use Only. Not for use with the public.

3 month 1 Year 3 Years 5 Years 10 YearsInception

(12/31/1996)

Invesco Emerging Market Bond Fund (C Shares) 2.21% 40.92% 3.98% 7.46% 11.24% 8.31%

JP Morgan EMBI Global Diversified Index 1.62% 29.82% 6.63% 7.99% 10.90% 9.93%

Excess Return 0.59% 11.10% -2.65% -0.53% 0.34% -1.62%

40.92%

3.98%7.46%

11.24%

29.82%

6.63% 7.99% 8.31% 9.93%10.90%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

1 Year 3 Years 5 Years 10 Years Inception(12/31/1996)

Invesco Emerging Market Bond Fund (C Shares) JP Morgan EMBI Global Diversified Index

Invesco Emerging Market Bond Fund PerformanceAs of December 31, 2009

Source: Invesco and JPMorgan. Past performance is not an indication of future performance, provides no guarantee for the future and is not constant over time. (Source: © 2009 Morningstar) * Mid to mid, gross income re-invested to 31 December 2009 unless otherwise stated. The figures do not reflect the initial charge payable by individual investors. ** Mid to mid, gross income re-invested to 31 December 2009. All performance data on this sheet is in fund currency.


Invesco Emerging Local Currencies Debt FundAs of December 31, 2009

3 Month 1 Year 3 Year

Since Inception

(12/31/2006

Invesco Emerging Local Currencies Debt Fund (A-Inc Shares) 2.49% 27.34% 8.31% 8.31%

JP Morgan GBI-EM Global Diversified Index 2.83% 21.98% 10.94% 10.94%

Excess Return -0.34% 5.36% -2.63% -2.63%

2.49%

27.34%

8.31% 8.31%

2.83%

21.98%

10.94% 10.94%

0%

5%

10%

15%

20%

25%

30%

3 Month 1 Year 3 Year Since Inception(12/31/2006)

Invesco Emerging Local Currencies Debt Fund (A-Inc Shares)JP Morgan GBI-EM Global Diversified Index

Source: Invesco and JPMorgan. Past performance is not an indication of future performance, provides no guarantee for the future and is not constant over time. (Source: © 2009 Morningstar) * Mid to mid, gross income re-invested to 31 December 2009 unless otherwise stated. The figures do not reflect the initial charge payable by individual investors. ** Mid to mid, gross income re-invested to 31 December 2009. All performance data on this sheet is in fund currency.

25

Climate Overview - Emerging Market Historical Perspective


EMBI Global Diversified (US$)

GBI-EM Global Diversified (local currency)

Source: JPMorgan. As of December 31, 2009.1. Moody’s upgraded index to Baa3 from Ba1 on January 8, 2010

1 Latin America 27%2 Europe 33%3 Asia 29%4 Mid-East Africa 10%

2

3

4

1

Avg. QualityBaa3 (1) /BB+

Comparison of Emerging Market IndicesBy region

Avg. QualityBBB+

1 Latin America 42%2 Europe 27%3 Asia 22%4 Mid-East Africa 9%

##

2

3

4

1


EMBI Global Diversified (US$)

GBI-EM Global Diversified (local currency)

1 Brazil 10%2 Malaysia 10%3 Mexico 10%4 Poland 10%5 South Africa 10%6 Thailand 10%7 Hungary 10%8 Turkey 9%9 Indonesia 9%10 Colombia 4%11 Russia 4%12 Peru 2%13 Chile 1%14 Egypt 0%14 Total Countries ###

1

2

3

4

56

7

8

9

1011 121314

Comparison of Emerging Market IndicesBy country

1 Brazil 8%2 Russia 8%3 Turkey 8%4 Mexico 7%5 The Philippines 7%6 Indonesia 6%7 Colombia 5%8 Venezuela 4%9 Malaysia 4%10 Lebanon 4%11 Peru 4%12 Panama 4%13 Poland 3%14 Other Latin 10%15 Other Europe 8%16 Other ME/Africa 5%17 Other Asia 4%39 Total Countries 99%

2

3

4

5

6789

1011

12

13

14

15

116

17

Source: JPMorgan. As of December 31, 2009.


> US$1,767 billionEmerging Markets Total

US$1,126 billionGBI-EM Broad (in local currency)

US$240 billionCEMBI Broad (EM Corporates)

€59 billionEURO EMBIG (ext)

US$342 billionEMBI Global (US$, ext)

Summary of Market Capitalization (As of December 31, 2009)

Source: JPMorgan, December 31, 2009.

Large Local Currency Universe Defined by indices

Reference index – GBI-EM Global Diversified. 14 EM Countries (Brazil, Malaysia, Mexico, Poland, South Africa, Turkey, Thailand, Hungary, Indonesia, Colombia, Chile, Peru, Russia, & Egypt). Sovereign bonds denominated in local currency.

Market capitalization limited to maximum of 10% in any one country.


Emerging Market: Various Crises Have Not Prevented Higher Index Returns

0

100

200

300

400

500

600

Sep-94 Sep-95 Sep-96 Sep-97 Sep-98 Sep-99 Sep-00 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09

FirstBrady

Exchange(Mexico Apr

’96)

Emerging market debt continues to mature1980-1994

• Early 1980s – Latin Defaults

• Mid 1980s – EM Debt Trading Commences

• March 1990 – First Brady Plan (Mexico)

EMBI Global Diversified Index (Cumulative Total Return) – Growth of $1001994–Present

MexicoTequilaCrisis

(’94 ’95)

AsiaCrisis

(Jul ’97)RussiaDefault(Aug ’98)

Ecuador Default

PakistanRestructuring

(Dec ’99)

ArgentinaDefault

(Dec ’01)DevaluationBrazil

(Jan ’99)

Ukraine Default (Jan ’00)

Mexico getsInvestment Grade(Moody’s Mar ’00)

UruguayRestructuring

(Apr ’03)

ArgentinaRestructuring

(Jun ’05)

Dom Rep Restructuring (May ’05)

US SubprimeContagion

Global Credit Crisis (Sep ’08)

Source: Data for EMBIGD from JPMorgan, December 31, 2009

Dubai World


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Nov-9

4Au

g-95

May-9

6Fe

b-97

Nov-

97Au

g-98

May-9

9Fe

b-00

Nov-

00Au

g-01

May-0

2Fe

b-03

Nov-

03Au

g-04

May-0

5Fe

b-06

Nov-0

6Au

g-07

May-0

8Fe

b-09

Nov-

09

100 Day EMBIGD Volatility (of Daily Returns)

Structural Decline in Emerging Market Bond ContagionContagion rose but is still less than in 1994 or 1998

Source: Data for EMBIGD from JPMorgan, December 31, 2009.

Tequila Crisis

Asia Crisis

Russia Default

Brazilian Elections

Fed Raises Rates

Arg Default: Only a Small Increase in Volatility US Subprime

Contagion

Global Credit Crisis

Dubai World


Evolution of Emerging Market

Exhibit 2: Tighter EM Spreads Justified by Improving Fundamentals

Exhibit 1: Credit Quality of EM IGOV Index -Market Cap Weighted

Source: Bank of America/Merrill Lynch. Chart prepared by Invesco with data through December 31, 2009.

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Ba1/BB+

Ba2/BB

Ba3/BB-

B1/B+

29.0

30.0

31.0

32.0

33.0

34.0

35.0

36.0

Jan-

02Ju

l-02

Feb-

03

Aug-

03

Mar-0

4

Sep-

04

Apr-0

5

Oct-05

Apr-0

6

Nov-0

6

May-0

7

Dec-0

7

Jun-

08

Jan-

09Ju

l-09

Rat

ing

0

100

200

300

400

500

600

700

800

900

1000

Sp

read

s

EM credit ratingsEM spreads


Emerging Market Bonds Have Evolved Into a Strategic Asset Class

• Improvements in the Asset Class

— Increased diversification

— Improved credit ratings and instrument types

— Abandonment of fixed exchange rates

— Greater FX reserves

— Better quality of information

• Improvements in the Investor Base

— A broadening of investor base

— Less leverage and more buy and hold

• Shocks Appear to Have Toughened the Asset Class

— Emerging market bonds remained resilient in this volatile period relative to historical global recessions and time of economic uncertainty within emerging market countries

Source: Invesco. The opinions expressed are based on current market conditions and are subject to change without notice.

33

Climate Overview - Current Market Perspective


Advanced and Emerging MarketsSovereign and corporate bond yields December 2003, through December 2009

0

5

10

15

20

25

Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09

Yie

ld (

%)

Adv Sovereign Global Corporate Global High Yield EM Sovereign EM Corporate

Start of global liquidity glut and US yield

curve flatteningBear

Stearns

Lehman Bros., AIG,

Merrill Lynch

Source: Barclays data, December 31, 2009. Chart prepared by Invesco.

Northern Rock,

Countrywide


Global GDP GrowthPercent growth quarter-over-quarter, annualized

Source: Data from IMF World Economic Outlook Update, January, 2010; chart created by Invesco. Actual data through December 31, 2009; gray shaded area is forecasted data for 2010Q1 through 2011Q4 from IMF staff estimates as of January 2010. See Appendix for country listings for Emerging and developed economies and Advanced economies.

-10

-5

0

5

10

15

2000

Q1

2000

Q4

2001

Q3

2002

Q2

2003

Q1

2003

Q4

2004

Q3

2005

Q2

2006

Q1

2006

Q4

2007

Q3

2008

Q2

2009

Q1

2009

Q4

2010

Q3

2011

Q2

Advanced economies Emerging and developing economies World


Developed Country Fiscal Deficits Now More Than Double Level of Emerging Market Countries

As of December 31, 2009. Source: JP Morgan. Actual data through December 31, 2008, forecasted data for 2009 and 2010See Appendix for country listings for emerging and developed economies.1. Central Eastern Europe, Middle East and Africa

Developed Economies 2008 2009 2010

Developed Markets (3.30) (8.60) (8.50)

United States (3.10) (9.90) (9.50)

Japan (6.60) (11.30) (10.40)

Euro area (2.00) (6.10) (7.10)

United Kingdom (6.20) (12.10) (11.20)

Emerging Economies 2008 2009 2010

Emerging Economies (0.90) (4.10) (3.20)

Latin America (0.80) (3.10) (3.20)

CEEMEA (1) (0.10) (6.20) (4.90)

Emerging Asia (1.30) (3.80) (2.80)


Core Inflation Twelve-month change (%) in the consumer price index

Source: Data from IMF World Economic Outlook Update, January 2010; (IMF cited sources Bloomberg Financial Markets, Haver Analytics and IMF staff calculations); chart created by Invesco. Data from January 2002 through December 2009 for Advanced and World economies and January 2002 through November 2009 for Emerging economies. See Appendix for country listings for Emerging and developed economies and Advanced economies.

0

2

4

6

2002 2003 2004 2005 2006 2007 2008 2009

Advanced economies Emerging economies World


Source: JPMorgan for data, December 31, 2009. Chart prepared by Invesco.

Emerging Market Sovereign and Corporate Issuance

52 5180 80

3649

69 6753

36 28

75

236

22 28

20

47

6693 121 156

57

135

0

50

100

150

200

250

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Sovereign Corporate & Bank

USD

bill

ion

• EM debt issuance reached a record high of US$210 billion• EM debt issuance forecasted to reach US$196 billion in 2010


A Rebound in Commodity Prices

Source: Data from IMF World Economic Outlook Update, October 2009; Actual data through June 2009; gray shaded area is estimated data from IMF staff estimates as of October 2009. (IMF cited sources: Barclays Capital, Bloomberg Financial Markets and IMF staff estimates); chart created by Invesco.

Commodity Price Indices(January 2003 = 100)

50

100

150

200

250

300

350

400

450

Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10

Energy Food Agricultural Raw Materials Metals Beverages


• 2010 returns to be more driven by bottom-up credit selection, less by top-down market direction (i.e. less beta and more alpha).

• EM fundamental and financial market outlooks remain robust.

• Smaller countries provide an attractive carry and tend to be less correlated to the broader market. We see opportunities in this area within Iraq, Pakistan, Dominican Republic, Tunisia, Sri Lanka.

• By Region- Large country opportunities:

Latin America: Argentina, Brazil and Uruguay

Europe: Russia and Kazakhstan

Asia - Middle East – Africa: Qatar, UAE, Egypt and Indonesia

• Where we see areas of risk over the year:

Developed market sovereign risk

Removal of monetary easing and U.S. Treasury rates moving higher

Elections in emerging markets may provide short-term trading opportunities

• JP Morgan estimates total EM debt issuance to reach US$196 billion in 2010. EM debt inflows continue to be positive and could double in 2010, which is supportive for technicals.

Invesco Emerging Market Fund –Outlook

Source: Invesco, as at 31 December 2009. The opinions expressed are based on current market conditions and are subject to change without notice.


FX in 2010

• EM currencies should be generally well supported as the interest rate differential vs core markets widens, commodity prices remain high and capital inflows are robust

• Broadly by region were we see opportunities:

Latin America: BRL, MXN and PEN

Europe: RON, PLN, EGP and RUB

Asia: PHP, KRW, MYR and CNY, where valuations remain attractive

• Where we see areas of risk over the year:

Elections in 2010 (Ukraine, Colombia, Philippines, Brazil, Poland, Hungary) may provide trading opportunities

Rates

• Virtually all Central Banks will be tightening in 2010. However, this is not necessarily bearish as many curves already price several rate hikes

• Where we see opportunities:

Brazil, Mexico and Poland

Invesco Emerging Local Currencies Debt Fund –Outlook

Source: Invesco, as at 31 December 2009. The opinions expressed are based on current market conditions and are subject to change without notice.

42

Appendix

42


Emerging Markets Bond Index Global (EMBI Global): The EMBI Global tracks total returns for US dollar-denominated debt instruments issued by emerging market sovereign and quasi-sovereign entities: Brady bonds, loans, Eurobonds. Currently, the EMBI Global covers 219 instruments across 39 countries.

Emerging Markets Bond Index Global Diversified (EMBI Global Diversified): The EMBI Global Diversified is a uniquely-weighted version of the EMBI Global. It limits the weights of those index countries with larger debt stocks by only including specified portions of these countries’ eligible current face amounts of debt outstanding. The countries covered in the EMBI Global Diversified are identical to those covered by the EMBI Global.

EURO Emerging Markets Bond Index Global (EURO EMBIG): The EURO Emerging Markets Bond Index Global (EURO EMBIG) tracks total returns for Euro-denominated, straight fixed coupon instruments issued by emerging market sovereign and quasi-sovereign entities. The EURO EMBI Global currently covers 53 instruments across 16 countries.

Government Bond Index-Emerging Markets (GBI-EM): The GBI-EM is the first comprehensive, global local emerging markets index, and consists of regularly traded, liquid fixed-rate, domestic currency government bonds to which international investors can gain exposure. Variations of the index (GBI-EM Global, GBI-EM Global Diversified, GBI-EM Diversified) are available to allow investors to select the most appropriate benchmark for their objectives.

Corporate Emerging Markets Bond Index (CEMBI): The CEMBI tracks total returns of U.S.-dollar-denominated debt instruments issued by corporate entities in emerging market countries. Two variations are available: CEMBI Broad and CEMBI. The CEMBI Broad is the most comprehensive corporate benchmark followed by the CEMBI, which consists of an investable universe of corporate bonds. Both indices are also available in Diversified versions.

As of December 31, 2009.

LithuaniaMalaysia Mexico Pakistan Panama Peru The Philippines Poland Russia Serbia South Africa Sri Lanka Tunisia Turkey Ukraine Uruguay Venezuela Vietnam

EURO EMBIG, by Country

Brazil Bulgaria China Croatia Hungary Lithuania Mexico Morocco Peru Philippines Poland Romania South Africa Turkey Ukraine Venezuela

GBI-EM Broad/GBI-EM Broad Div, by Country

Argentina Brazil Chile China Colombia Egypt Hungary India Indonesia Malaysia Mexico Peru Poland Russia South Africa Thailand Turkey

CEMBI, by Country

Brazil ChileChinaColombia Egypt Hong Kong Israel India IndonesiaJamaica KazakhstanKuwaitMexico MalaysiaPeru PhilippinesQatarRussia SingaporeSouth Africa

Argentina Belize Brazil Bulgaria Chile China Colombia CroatiaDominican Rep Ecuador Egypt El Salvador Gabon Georgia Ghana Hungary Indonesia Iraq Jamaica KazakhstanLebanon

EMBI Global/EMBI Global Diversified, by Country

Descriptions of Indices

Taiwan United Arab EmiratesVenezuela


IMF Definitions of Advanced Economies and Emerging and Developing Economies

Advanced economiesComposed of 33 countries: Australia, Austria, Belgium, Canada, Cyprus, Czech Republic, Denmark, Finland, France, Germany, Greece, Hong Kong SAR, Iceland, Ireland, Israel, Italy, Japan, Korea, Luxembourg, Malta, Netherlands, New Zealand, Norway, Portugal, Singapore, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Taiwan Province of China, United Kingdom, United States

Emerging and developing economiesComposed of 149 countries: Afghanistan, Republic of, Albania, Algeria, Angola, Antigua and Barbuda, Argentina, Armenia, Azerbaijan, Bahamas, The, Bahrain, Bangladesh, Barbados, Belarus, Belize, Benin, Bhutan, Bolivia, Bosnia and Herzegovina, Botswana, Brazil, Bulgaria, Brunei Darussalam, Burkina Faso, Burundi, Cambodia, Cameroon, Cape Verde, Central African Republic, Chad, Chile, China, Colombia, Comoros, Congo, Democratic Republic of, Congo, Republic of, Costa Rica, Côte d'Ivoire, Croatia, Djibouti, Dominica, Dominican Republic, Ecuador, Egypt, El Salvador, Equatorial Guinea, Estonia, Ethiopia, Fiji, Gabon, Gambia, The, Georgia, Ghana, Grenada, Guatemala, Guinea, Guinea-Bissau, Guyana, Haiti, Honduras, Hungary, India, Indonesia, Iran, Iraq, Islamic Republic of, Jamaica, Jordan, Kazakhstan, Kenya, Kiribati, Kuwait, Kyrgyz Republic, Lao People's Democratic Republic, Latvia, Lebanon, Lesotho, Liberia, Libya, Lithuania, Macedonia, Former Yugoslav Republic of, Madagascar, Malawi, Malaysia, Maldives, Mali, Mauritania, Mauritius, Mexico, Moldova, Mongolia, Montenegro, Morocco, Mozambique, Myanmar, Namibia, Nepal, Nicaragua, Niger, Nigeria, Oman, Pakistan, Panama, Papua New Guinea, Paraguay, Peru, Philippines, Poland, Qatar, Romania, Russia, Rwanda, Samoa, São Tomé and Príncipe, Saudi Arabia, Senegal, Seychelles, Sierra Leone, Solomon Islands, South Africa, Sri Lanka, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Sudan, Suriname, Swaziland, Syrian Arab Republic, Tajikistan, Tanzania, Thailand, Timor-Leste, Dem. Rep of, Togo, Tonga, Trinidad and Tobago, Tunisia, Turkey, Turkmenistan, Uganda, Ukraine, United Arab Emirates, Uruguay, Uzbekistan, Vanuatu, Venezuela, Vietnam, Yemen, Republic of, Zambia, Zimbabwe

Source World Economic Outlook Database. As of October 2009, the most recent date available (database is updated April and September/October each year).


Important information

This document is exclusively for use by professional clients in Continental Europe. It is not intended for and should not be distributed to, or relied upon, by the public.

The opinions expressed herein are based on current market conditions and are subject to change without notice.

This document does not form part of any prospectus. This document contains general information only and does not take into account individual objectives, taxation position or financial needs. Nor does this constitute a recommendation of the suitability of any investment strategy for a particular investor. While great care has been taken to ensure that the information contained herein is accurate, no responsibility can be accepted for any errors, mistakes or omissions or for any action taken in reliance thereon. Opinions and forecasts are subject to change without notice. The value of investments, and the income from them, can fluctuate (this may partly be the result of exchange rate fluctuations), and investors may not get back the full amount invested. Neither Invesco Asset Management nor any affiliate of Invesco Ltd. guarantee the return of capital, distribution of income or the performance of any fund or strategy. There is potential for increased volatility in emerging stock markets, and only a modest proportion of investable wealth should be invested in them.Past performance is not an indication of future performance, provides no guarantee for the future and is not constant over time. This document is not an invitation to subscribe for shares in a fund nor is it to be construed as an offer to buy or sell any financial instruments. As with all investments, there are associated inherent risks. This document is by way of information only. Asset management services are provided by Invesco in accordance with appropriate local legislation and regulations.

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